Suppose that a consumer has the utility function U(x, y) = xy, where x denotes the quantity

of good X and y denotes the quantity of good Y . Let the per unit prices be pX = 4 and pY = 1.

Also, suppose that income is m = 100.

Show that the consumer's welfare has increased under the income tax scheme as com-

pared to the indirect tax scheme. Illustrate your answer with a diagram.